Home > Blog > Home > 6 mistakes to avoid when taking out a home insurance policy
6 mistakes to avoid when taking out a home insurance policy
In 2020, the Grand Duchy had about 265,000 households, including over 170,000 owner-occupiers. Home insurance isn’t a legal requirement in Luxembourg, but is nonetheless highly recommended. Tenants will often find it’s a mandatory requirement in their rental agreement. Yet, many don’t do their homework, which can cost them dearly when they make a claim. So before you take out a policy, learn about the 6 mistakes to avoid and ensure you get the best cover.
1. Underestimating the value of your possessions
Your insurer will create a policy based on the value of the possessions you declare. They will ask you for an estimate that’s as accurate as possible. Undervaluing these to get a reduced insurance premium could be a costly mistake if you ever need to make a claim.
The amount stated when you take out the policy is decisive and will be used to calculate compensation if you make a home insurance claim. You won’t be sufficiently compensated for your losses if you undervalue your possessions if there’s a fire or burglary.
Make a comprehensive room-by-room list of your possessions: furniture, electronics, clothing, jewellery, valuables, etc. Keep all paperwork that would help a loss adjuster in a safe place: invoices, photos or even videos. You can also upload digital copies to the cloud and easily access them in the event of a claim. You can store valuables in fire-proof boxes and also sign up for Foyer’s Valuable Items policy, so your possessions are insured against theft and breakages at home and elsewhere.
Good to know: have your valuables estimated by a professional to avoid any nasty surprises.
If you own valuable items such as jewellery or luxury watches, consider using the services of an expert or an online valuation tool to get an accurate estimate. Be warned that there’s a maximum contents insurance percentage (around 40%), so you should accurately declare the relevant items. At Foyer, we can help you value the contents of your home – just follow our tips to protect your possessions.
2. Overlooking any exclusions
Another classic mistake: failing to check your potential home insurance’s exclusions and coverage limits.
Pay attention to damages not included in the policy to avoid disappointment. These are damages or risks not covered by a home insurance policy. Some insurance policies may exclude risks such as acts committed by third parties or damage caused by animals, depending on the terms of the contract. You may find that some types of damage, such as water damage or natural disasters, are subject to specific conditions. If the terms and conditions of your home insurance are unclear or confusing, you should contact the insurer. They will explain and clarify any queries you may have.
3. Making a decision based on price
Don’t fall into the bargain insurance premium trap! A low premium may seem appealing, but it shouldn’t be at the expense of comprehensive cover tailored to your home and contents. A bargain price may seem attractive but could be costly in the event of a claim. You may think you’re saving money now, but if you submit a home insurance claim, you may be poorly covered or face a very high excess that will cost you in the long term.
Ensure you understand what is included, the insurance payment ceilings and items not covered. Don’t focus on the price and pay attention to the policy’s clauses.
4. Not comparing insurance policies
In Luxembourg, you’ll find insurance companies offer a variety of policies adapted to different needs. Don’t sign up for the first policy you see. Do some initial research online to get an idea, for example, read customer reviews. You can then make appointments with advisors from your selected companies to get tailored quotes. Take the time to compare the coverage, the excess, compensation payment ceilings and any other costs.
Not paying attention to the clauses can lead to unsuitable coverage: your home insurance must meet your requirements.
5. Another common mistake when taking out home insurance is not paying attention to the excess
Checking the excess amounts is extremely important. The excess is the amount you must pay if you proceed with a claim. Some insurance policies have high excess amounts which lowers the cost of their policy. However, this means you will have to pay a significant share of the costs in the event of a claim. At Foyer, we offer excess-free options, so you benefit from comprehensive coverage at no additional cost if you make a claim.
6. Overlooking the legal protection option
People often overlook legal protection, whether it is a standalone policy or an option added to a home insurance contract. Many people only think about civil liability, storm damage, broken windows, etc. and don’t consider legal cover.
And yet legal protection insurance is essential. If you find yourself in a dispute with neighbours, construction companies or tenants, it will cover part of your lawyer’s fees or other costs related to legal proceedings.
Good to know: check if your insurance includes legal protection.
To make your life easier, here at Foyer, we offer useful extra coverage options including legal protection which you can add to our standard policy. We provide support in the event of disputes.
Choosing the right home insurance policy should not be taken lightly. Avoiding common mistakes will ensure your peace of mind if you suffer a major blow. Remember to accurately value your possessions, read the terms and conditions carefully, and take your time to compare quotes.
3 key points to remember:
- Carefully estimate the value of your possessions: a detailed inventory will prevent unpleasant surprises in the event of a claim.
- Choose the coverage that meet your needs: check that your contract covers specific goods, such as musical instruments, bicycles, computers, home cinema systems, jewellery, etc.
- Compare offers: don’t go for the first policy you see, carefully read all the clauses and compare several quotes.
